With Atlas Buy, Facebook Positioning For Ad Expansion

2/28/13Follow @bromano

Facebook appears to be moving closer to an Internet-wide advertising network, and much of that effort will be based in Seattle.

The social network is buying from Microsoft the Atlas Advertiser Suite, one of the last vestiges of the Redmond technology giant’s costly 2007 purchase of aQuantive. While terms of the deal haven’t been disclosed, Advertising Age suggested at the beginning of the month a purchase price of less than $100 million, meaning Mark Zuckerberg is paying almost literally pennies on the dollar for the technology and talent that Microsoft dropped $6.3 billion on—at the time its biggest buy—less than six years ago. (Last summer, Microsoft wrote down all but $100 million of the aQuantive purchase.)

For some quick perspective on how the advertising world has changed in that time, and how Facebook itself has changed it, recall that Facebook went from 20 million users in April 2007 to 50 million in October of that year. Now, as we all know, something like a seventh of the planet uses Facebook.

Here’s one take on how this new piece fits into the Facebook puzzle, based on a conversation I just had with someone who worked in Microsoft’s display advertising team at the time of the aQuantive acquisition, and remains engaged in online marketing:

“The real value for Facebook long-term is not showing ads on Facebook, it’s showing ads across the Internet using Facebook data,” he says. “The Like button is everywhere. Facebook knows where I am, what I read, how long I spent there.”

By launching an ad network that extends beyond the walls of Facebook, the company could buy advertising inventory from third-party publishers, pair it with Social Graph and browsing data on Facebook users, and re-sell to marketers highly-targeted, personalized ads on sites across the Web.

Facebook is not there yet, but Atlas is a major step in that direction, and a sign that the company is in a hurry—opting to buy rather than build technology. They’re also presumably getting Atlas relationships with publishers, ad networks, and advertisers, and expertise in online display advertising sales.

Atlas is about tracking marketing campaigns across different channels, explains Facebook’s Brian Boland in a post announcing the deal. Read between the lines with this Internet-wide ad network in mind:

“If marketers and agencies can get a holistic view of campaign performance, they will be able to do a much better job of making sure the right messages get in front of the right people at the right time,” Boland says. “Atlas has built capabilities that allow for this kind of measurement, and enhancing these systems will give marketers a deeper understanding of effectiveness and lead to better digital advertising experiences for consumers.”

Marketers have been able to use Atlas to measure Facebook advertising campaigns since June. Facebook pledges to build on that technology “with the goal of making Atlas the most effective, intuitive, and powerful ad serving, management and measurement platform in the industry,” Boland says.

So where does Seattle come in?

While Facebook won’t disclose how many of its roughly 4,700 employees are in Seattle, Boland does say the “Seattle engineering office already drives important parts of our ad system, and we plan to substantially invest in and build out our Seattle engineering and product teams.” And Seattle-based Atlas will remain here as part of Facebook.

That only strengthens the aQuantive legacy that has made digital advertising a strong, but sometimes overlooked industry in Seattle.

As former aQuantive executive Clark Kokich told me last fall before the Seattle Interactive Conference, “I don’t think people in Seattle understand just how big the digital ad business is here, and how much innovation and how much revenue is flowing through Seattle, because in traditional marketing Seattle was never an important center.”

If Facebook builds an Internet-wide ad network from here, it will be hard to overlook Seattle as a digital advertising center in the future.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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